An Environmental Protection Agency (EPA) report recommending that oil and gas companies remain exempt from strict federal hazardous-waste controls is drawing criticism from environmental groups. The report, which is now open to public comment, was submitted to Congress Dec. 29, more than five years after it was originally due. It was commissioned by Congress in 1980, to determine whether oil and gas drilling wastes -- water, mud and brine contaminated with petroleum products and heavy metals -- should be regulated as hazardous wastes under the federal Resource Conservation and Recovery Act (RCRA). The wastes have been temporarily exempt from the act while Congress awaited completion of the report.

The report notes that "Documented damages suggest that all major types of [oil and gas industry] wastes and waste management practices have been associated to some degree with endangerment of human health and damage to the environment." It also finds that states have largely failed to enforce existing laws designed to regulate the disposal of petroleum wastes. Nevertheless, it concludes, the wastes should continue to be exempt from existing federal regulations, in part because enforcement would pose a "substantial financial burden" on oil and gas companies and consumers.

"The EPA themselves say that the lack of state enforcement is the main problem," says Jane Bloom, an attorney with the Natural Resources Defense Council in New York City. "They nonetheless argue that the status quo should be maintained and that the federal government should stay out of it."

More than 20 billion barrels of petroleum wastes were produced in the United States in 1985, according to the report. The most common waste by far is "produced water," which is generated from oil and gas wells during production. It contains such poisons as benzene, lead and arsenic.

Under existing state laws, industries may discharge controlled amounts of produced water into surface water, a practice the EPA concedes "may be damaging to aquatic communities." In addition, they may discharge it into large pits or into various types of wells. The report notes that many of these pits and wells are not designed to adequately protect nearby drinking-water supplies.

For years, oil companies in Alaska have discharged produced water into pits, allowed it to settle, and then spread it on ecologically sensitive tundra or sprayed it on roads as a dust suppressant. The EPA notes that such practices are "of concern" to EPA and others. However, the report concludes, it is still not clear "whether or not there are adverse environmental impacts resulting from this practice."

The report concludes that subjecting oil and gas wastes to the RCRA regulations governing other hazardous wastes is "unnecessary and impractical." It says such controls could discourage U.S. oil production, shrinking it by as much as 12 percent, and could boost consumer costs as much as $4.5 billion per year. Instead, the report says, states should improve enforcement of existing standards.

Such conclusions, says attorney Bloom, "simply reflect successful lobbying by the oil and gas industry. The report never even bothered to determine which of the wastes were hazardous." In addition, she says, the EPA report relies largely on figures provided by the American Petroleum Institute (API), an oil-industry lobbying group. "Congress asked EPA, not API, to prepare the report," she said in earlier, written comments. "The extensive inclusion of API-generated information fatally undermines the credibility of EPA's effort."

The report says API estimates were used because information on oil and gas waste "is not routinely collected nationwide," adding that API figures were subjected to "careful review."

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